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North St. Paul’s property tax levy set to increase 10 percent

North St. Paul homeowners with median-valued homes can expect to pay an additional $2.42 per month in city property taxes in 2018, representing about a 10 percent increase over last year.

Since the preliminary general fund budget and levy were set in September, city staff has worked to minimize the increase to resident’s taxes.

Staff downsized the general fund budget from just over $7 million, to the $6.8 million budget passed unanimously by the North St. Paul city council Dec. 5. The property tax levy changed from the proposed $3.5 million to about $3.3 million.

During the Dec. 5 meeting, North St. Paul Finance Director Jeanne Day said that in 2017 median-valued homes in North St. Paul were worth about $168,000, but those homes increased in value to $173,000 for 2018.

“This continued growth helps buffer the increases of the tax rate affiliated with the tax levy that we have going forward,” Day explained.

However, she added that although property values continue to rise, the 2.6 percent increase in median-valued homes is still under Ramsey County’s average increase of 6.3 percent.

According to Day, the two largest components of the general fund budget are funding for the public safety and public works departments, which represent 53 percent and 22 percent of the budget respectively. Keeping the departments well funded, she added, represents the city’s top priority.

Some of the 10 percent increase in the 2018 property tax levy is due to a $300,000 decrease in the amount of funds transferred from the electric fund to the general fund.

In an interview following the Dec. 5 meeting, Day explained that all the city’s enterprise funds, such as electric, water and sewer, have some money transferred to the general fund.

“Some of it is to compensate for overhead expenses or indirect costs, those types of things, and other parts of it are to subsidize the tax levy so we can keep the tax levy down a little bit,” Day said.

She explained that money is transferred from utility funds, like the electric fund, to ensure some of the tax levy is supported by renters, who don’t pay property taxes.

“It’s another way of evenly spreading those dollars,” Day said.

In 2017, $1.2 million was transferred from the electric fund to the general fund — a reduction of $150,000 from 2016. The reduction was the first in a set of three equal reductions planned for 2017, 2018 and 2019.

“We are trying to get our electric rates a little lower and be able to still provide the services that we do, and maintain a balanced budget,” Day said.

She said that in a city budget workshop, it was proposed that if the council chose to take on both 2018 and 2019’s expected reductions at once, and combine them for a total of $300,000, the city’s 2018 electrical rate increase wouldn’t be as extreme.

However, electrical rates are still expected to increase by $1.33 for the average North St. Paul household.

In 2018 the electric fund will still contribute $900,000 to the general fund, with about $345,000 of that amount coming from franchise fees and the rest as a transfer.